This Could Be Our 1989

By John Mauldin

I think many of my readers are in the same boat I’m in: we are still sorting out the implications of last Tuesday’s election. My style is generally not to shoot from the hip but to think about things before I start to write. When I have adopted the “ready–fire–aim” style of writing, I have usually found myself going back and asking, “What was I thinking?”
And the answer is that I wasn’t doing enough thinking.

So this weekend I’m going to hold my fire and instead share with you an essay from Jeffrey Tucker of the Foundation for Economic Education (FEE). You may wish to think of this as my Outside the Box offering for the week, and on Wednesday I’ll send my regular letter – after I have done a little more head scratching.

Tucker’s essay suggests that the presidential election is nothing less than a major paradigm shift. Let me give you a couple especially insightful paragraphs:
All these details of the Trump platform are still important, but strike me as less relevant to what we can expect going forward. The more I look at it, the less it seems to me that the election results are less about what Trump believes and more about what he represents: a fundamental shattering of an old paradigm. And I'm finding the widespread commentary that this represents some kind of triumph of racism, misogyny, etc. etc., to be superficial and even preposterous. And you know this if you visit with any regular voter.

What lies in ruins here is not common decency and morality – much less the character of a whole people and nation – but rather an anachronistic, arrogant, entitled, smug, conceited ruling elite and ruling paradigm. You can see this in the clues that show that the vote was not so much for a particular vision of one man, but against a prevailing model of managing the world.
I found myself nodding in agreement that much of what he says. If this were my essay, there would be a few omissions and additions, but I think he has the essential direction correct. There is big change brewing, and it is up to us to determine what that change will be. When I read (somewhat bemusedly) that the halls of power in Europe are in an uproar over our election, I think that they should be. Not because Trump is now president but because elites everywhere – the people who “know” how the world should be run and expect the “little people” to stay in line – are an endangered species. Thankfully. This gets back to the heart of what I’ve been writing about: the Protected versus the Unprotected.

It is up to the leadership of countries and communities to make sure that everyone is protected – equally – and to do so without burdening future generations with the task of paying for the solutions they come up with. The world is transforming around us. The old institutions are not up to the task of managing a world awash in massive and ever faster technological and social changes that are not leaving us enough time to adjust. We went from a world where 50% of us worked on family farms to where less than 2% do today, but that took 8-10 generations. What are we going to do when the multiple millions who make their living in the transportation industry, whether in trucking or as taxi drivers, see their jobs evaporate in just half a generation? This same employment paradigm shift is going to happen in dozens of industries, and seemingly all at once. At least that’s what it will feel like to the workers who are bounced from their jobs.

To my friends around the world who shudder at the thought of a Trump presidency, let me offer a simple bit of advice: get a grip. Understand the system we have. We elected a president, not a king. US presidential candidates have made campaign pledges for 200 years, on both the winning and losing sides. And their supporters and opponents have misinterpreted those pledges and overestimated what the incoming president could really do. Presidents are actually quite limited in their range of powers.

We do not have an imperial presidency – yet. And I don’t think we will. We have a system of checks and balances; and while I don’t know Mitch McConnell or Paul Ryan personally, I know a lot of the people around them. They are not likely to fall over backwards at every idea thrown at them. They are jealous of the power and prerogatives of the legislative branch, as have been every Majority Leader and Speaker of the House since the the Republic’s inception. Plus, they have to herd a room full of cats who have their own ideas about how things should go. Presidents can lead, but they cannot dictate. The simple fact is that no matter what Trump would like to do, 90% of the things he proposes have to be approved by Congress.

Further, look at the people he has appointed to run his transition team. Now, some of my liberal friends will shake their heads and say “Exactly.” But these are not wild-eyed, trash-the-system conservatives. They are thoughtful, and they recognize the importance and respect the majesty of a change of order in the Republic. And frankly, as I look at them, this is a new brand of conservative. Oh, I admit that my friend Newt Gingrich, who is now vice-chair of the transition team, considers himself a Reagan Republican. And in some ways, maybe he is. But he’s also a conservative who wrote the book Breakout, about how we need to replace the Prison Guards of the Past. As he argues, it’s not a battle between the left and the right but between the past and the future. Newt is not someone who wants to take us back to the good old days, and no one that I know on the transition team (and I know a few) does, either. They are looking to the future and understand the transformation and the challenge that is coming at us.

Sidebar: Frankly, there is nothing that thrills my heart more than the potential – the hope – that Newt Gingrich will help or maybe lead the effort to install a new paradigm at the Food and Drug Administration. I have been writing about this for years. The FDA is the biggest obstacle to healthcare in the world. Period. It does not need to be reformed, it needs to be replaced with a 21st-century drug regulatory authority. (The food administration guys seem to do a pretty good job.) I don’t care whether you are an arch liberal or a rock-ribbed conservative, better healthcare and a longer healthspan should be of paramount interest to you. And the people that are blocking that future should be moved out of the way. And let me point out that 80% of the revolutionary biotechnology comes from the US. If we could simply free that up for small business and investors to exploit, we could create hundreds of thousands if not millions of high-paying ne w jobs. You want to see things change? Just saying…

There are a dozen different paths that the paradigm shift that Jeffrey Tucker writes about could take. As he says, that is the lesson we should all take from Hayek. Can
I see a dark path ahead? Absolutely. Several of them. But can I see a better and more hopeful path? Certainly. The path will be chosen by us.

The choices we have already made make the future we face uncertain and difficult.  
I know that many Republican leaders are pondering one of my favorite Churchill quotes: “The problems of victory are more agreeable than those of defeat, but they are no less difficult.” Dealing with the deficit, the debt, taxes, healthcare, ISIS, and and a whole host of problems in a world that is transforming around us is no less difficult today than it was last week, before we had an election. There will obviously be different answers to those problems, and we will often disagree about them, but they won’t go away. Before we rush to judgment about the path the new administration is opening up, let’s see who Trump brings in to work with him.

But no matter whom he appoints, there will be no miracles to suddenly dissolve the problems that loom before us. For many of those problems, we are left only with choices that are limited and unpleasant.

This country is divided on the way forward, but I think it is safe to say that a majority of our citizens are looking for change. The Trump administration has four years to effect change that a majority will find favor with. Otherwise there will be a new administration.

And, as I have been saying for the past several months, it has been quite a while since we have had a recession. And when we do, it’s going to further limit our choices.

I will have more to say in my letter on Wednesday. For now I will just note that the economic realities of the world have not shifted much in one week. We still have too much debt, not just in the US but around the world. Budget deficits are out of control, not just in the US but around the world. The reactionary forces of protectionism are loose, and the results might not be salutary for investors.
Markets are stretched to valuations that have historically been dangerous.

I remain, as ever, a cautious optimist. But one who realistically knows that the future is uncertain and that Winter Is Coming.

How on God’s green earth are we supposed to make sense, from an economic and investment portfolio view, of what is happening? Seriously. That is the question I’m asking myself right now and have for several years. So let me leave you with the Jeffrey Tucker’s thoughtful, hopeful essay and go back to my studying and thinking.

But first, I want to invite you to a special event. We’re having a “Teleforum” this Monday at 6:00 PM ET, in which I’ll be joined by two of our top Mauldin Economics analysts, Robert Ross and Patrick Watson. I’ll give you a few thoughts and then we’ll take some live questions from the audience.

This won’t be pre-recorded; it will be live so that we can share our latest thoughts.
We’re trying out a new technology that has some interesting features, too. Instead of you having to dial in or download special software, you register with your phone number. The system will dial you at the appointed time, and we will all be connected. I hope you’ll join us. Just click here to register.

Your concerned about economic reality analyst,

John Mauldin
This Could Be Our 1989
Jeffrey Tucker

Originally published by the Foundation for Economic Education
November 11, 2016
You might think that the greatest political, cultural, economic shock of our lifetimes, right here in the USA, would unleash a torrent of salient and incisive commentary. There's been some good, some confused, some angry. But mostly what I've seen is a kind of mouth-open shocked.

Here’s the problem: all the experts were wrong. I’m in the same boat as almost everyone else. We followed the cues we had – polls, betting odds, our own intuitions – but they were all misleading, and everyone underestimated the vulnerability of the status quo. Admitting this takes humility – vast oceans of it. It challenges us to throw away what we thought we knew and consider a new way of thinking.

Trump triumphed over every bit of conventional and establishment wisdom on the whole of planet earth. What was once regarded as expertise lies in ruins. Not even the people with skin in the game, those betting on the outcome, came close to being right. It's the greatest smashing of a paradigm – a devastating crush of not only opinions but every existing establishment left, right, and center – I can imagine happening in real time.

And perhaps this is just the beginning. There could be more exciting times to come.
A Paradigm Ends
Most of us have spent the last several days just trying to get reoriented. Just last week, speaking in two states that swung the election, I spoke about a coming meltdown of the old days and the emergence of something new, hopefully a new freedom. I've written for several years that the old ways of politics are dying and the institutions it gave rise to are dying as well.

Here’s the problem in brief. The institutions of government we know all too well were built for a world that is rapidly fading away. Their systems no longer work.

And they are too costly. In times when people are watching every dollar, bargain hunting on every website, government looks ever more like a ripoff. As a result, there is an increasing disconnect between our lives and the regime under which we live.

Such a situation is not sustainable for the long term. Government is powerful, but not powerful enough to bend reality to its wishes.

The only analogy that really comes to mind is the collapse of the Soviet Union and its satellite states. The evidence of the end became obvious in 1989 with the revolution in Poland, and continued in Hungary, Romania, Czechoslovakia, and East Germany. Protests came to Tiananmen Square in China. The Berlin wall was brought down. Then the unthinkable: the Soviet Union itself dissolved as 14 countries declared their independence.
No one expected this to happen either. It was like an uncontrollable wave. People were in shock. There was a sudden sense that no one knew what was going on, that events were taking a course that outsmarted everyone, that all expertise was destroyed, and that there was a seismic shift in the universe.
In those days, the champions of freedom rejoiced about the devastation wrought to the Old World and we celebrated the possibilities of a New World.
I've written that something similar could and would happen in the Western democracies. Our systems seem stable. We have our establishments. We have our embedded expectations of how the world is supposed to operate, with its politics, economics, and culture. But real world events will take a different course, one that challenges everything we thought we knew.

What would this look like? No one could anticipate. I've speculated about the gradual decline to irrelevance of the old bureaucracies and institutions. Gradual but relentless – that’s how I imagined it would happen. And yet there are always those black swan events that make a mess out of all our wildest expectations.
The Black Swan
That is precisely how this strikes me right now – a black swan that is huge, fast, and ominous to the point that it causes mass intellectual and psychological meltdown. What's striking is this event is not as intellectually clean as the collapse of socialism, at least not to us. But that's probably because we all watched the events in Russia and Eastern Europe from afar. Our perspective, watching on television, was simple: the bad guys are being kicked out and freedom is winning.
The reality on the ground was more complicated. The revolutionaries had their own designs for power. The new people prepared to take power had their own agendas.
There were political machinations all around, as instability provided hope but also enormous danger. And while the universal results were a vast improvement, there was no clean line of travel between tyranny and freedom. Whole societies and regimes had to be rebuilt on a different basis and a different view of politics and economics.

In the last year and a half, I warned often of Trump's politics and his views. Many are illiberal in uncountable ways. But in other ways, there is a great deal of good here too. It's a wheat and chaff problem. On the plus side, what happened represents a serious blow to a technocratic, Progressivist, and managerial regime that could only perpetuate the status quo. On the downside, what stands to replace it is not the embodiment of the ideals of either the Scottish Enlightenment or a digital-age libertarianism.

All these details of the Trump platform are still important, but strike me as less relevant to what we can expect going forward. The more I look at it, the less it seems to me that the election results are less about what Trump believes and more about what he represents: a fundamental shattering of an old paradigm. And I'm finding the widespread commentary that this represents some kind of triumph of racism, misogyny, etc. etc., to be superficial and even preposterous. And you know this if you visit with any regular voter.

What lies in ruins here is not common decency and morality – much less the character of a whole people and nation – but rather an anachronistic, arrogant, entitled, smug, conceited ruling elite and ruling paradigm. You can see this in the clues that show that the vote was not so much for a particular vision of one man, but against a prevailing model of managing the world.
Our Uncertain World
Now, look at this from a Hayekian lens. This lens asks us to be humble in the face of an unknowable future and the uncertainty of a world that constantly resists planning and top-down rule. Here we can begin to make sense of what has happened.

Now, to be sure, there are dangers ahead. No one can deny that. The great risk is replacing a failed paradigm with yet another one of a different flavor. Maybe it will be worse. There is no way to know for sure until it happens. But here is where the role of ideas comes into play, and where the role of public intellectuals and institutions like the Foundation for Economic Education truly matter.

What we've learned from populist revolutions past is that they can turn in many different directions depending on the ideas that prevail in their wake. We've learned that it is not enough to hate the status quo and overturn an existing ruling class.

We need to be clear on what it is that we love, what kind of society we want to live in, what kind of people we want to be, how we regard our fellow human beings, what kind of ethical core should be at the center of our lives.
Here the liberal tradition has the answer. We need peace. We need opportunity for all, leading to a shared prosperity. We can depend on the spontaneous order to build the kind of world we desire. We can't plan it from the top. It must be ordered from below, through the lives, choices, behaviors, and decisions of millions and billions of people who are pursuing happiness above all else.

Speak Out with Courage
In other words, this is not the time to sit in stunned silence, much less join the chorus of people who are cursing the darkness around us or wishing that what is already done had occurred in a different way. This is the time for Leonard Read's candle to be lit and passed around the room, from person to person, room to room, city to city, nation to nation, all over the world.

Maybe this is it. Maybe this is the opportunity we've waited for for so long. It hasn't taken the form we expected, or even wanted. So it goes in life. No one explained this better than Hayek. We've been granted a glorious opportunity. The world is seeking out a new answer.

We are living in times that Thomas Kuhn would call "pre-paradigmatic." The old is going away, or already gone. What the future holds depends on the ideas that prevail in the great intellectual struggles of public life. I hope we all do what we can to shed light and wisdom on the present and for the future.

As Hayek said, this task will consume the whole of our lives going forward.


Let me hear your thoughts on this essay.

John Mauldin

Big Danger at the Lower Bound

Kenneth Rogoff

 .US Federal Reserve
CAMBRIDGE – Markets nowadays are fixated on how high the US Federal Reserve will raise interest rates in the next 12 months. This is dangerously shortsighted: the real concern ought to be how far it could cut rates in the next deep recession. Given that the Fed may struggle just to get its base interest rate up to 2% over the coming year, there will be very little room to cut if a recession hits.
Fed chair Janet Yellen tried to reassure markets in a speech at the end of August, suggesting that a combination of massive government bond purchases and forward guidance on interest-rate policy could achieve the same stimulus as cutting the overnight rate to minus 6%, were negative interest rates possible. She might be right, but most economists are skeptical that the Fed’s unconventional policy tools are nearly so effective.
There are other ideas that might be tried. For example, the Fed could follow the Bank of Japan’s recent move to target the ten-year interest rate instead of the very short-term one it usually focuses on. The idea is that even if very short-term interest rates are zero, longer-term rates are still positive.
The rate on ten-year US Treasury bonds was about 1.8% at the end of October.
That approach might work for a while. But there is also a significant risk that it might eventually blow up, just the way pegged exchange rates tend to work for a while and then cause a catastrophe. If the Fed could be highly credible in its plan to hold down the ten-year interest rate, it could probably get away without having to intervene too much in markets, whose participants would normally be too scared to fight the world’s most powerful central bank.
But imagine that markets started to have doubts, and that the Fed was forced to intervene massively by purchasing a huge percentage of total government debt. This would leave the Fed extremely vulnerable to enormous losses should global forces suddenly drive up equilibrium interest rates, with the US government then compelled to pay much higher interest rates to roll over its debt.
The two best ideas for dealing with the zero bound on interest rates seem off-limits for the moment. The optimal approach would be to implement all of the various legal, tax, and institutional changes needed to take interest rates significantly negative, thereby eliminating the zero bound. This requires preventing people from responding by hoarding paper currency; but, as I have explained recently, this is not so difficult. True, early experimentation with negative interest-rate policy in Japan and Europe has caused some disenchantment. But the shortcomings there mostly reflect the fact that central banks cannot by themselves implement the necessary policies to make a negative interest rate policy fully effective.
The other approach, first analyzed by Fed economists in the mid-1990s, would be to raise the target inflation rate from 2% to 4%. The idea is that this would eventually raise the profile of all interest rates by two percentage points, thereby leaving that much extra room to cut.
Several central banks, including the Fed, have considered moving to a higher inflation target.
But such a move has several significant drawbacks. The main problem is that a shift of this magnitude risks undermining hard-won central bank credibility; after all, central banks have been promising to deliver 2% inflation for a couple of decades now, and that level is deeply embedded in long-term financial contracts.
Moreover, as was true during the 2008 financial crisis, simply being able to take interest rates 2% lower probably might not be enough. In fact, many estimates suggest that the Fed might well have liked to cut rates 4% or 5% more than it did, but could not go lower once the interest rate hit zero.
A third shortcoming is that, after an adjustment period, wages and contracts are more likely to adjust more frequently than they would with a 2% inflation target, making monetary policy less effective. And, finally, higher inflation causes distortions to relative prices and to the tax system – distortions that have potentially significant costs, and not just in recessions.
If ideas like negative interest rates and higher inflation targets sound dangerously radical, well, radical is relative. Unless central banks figure out a convincing way to address their paralysis at the zero bound, there is likely to be a continuing barrage of outside-the-box proposals that are far more radical. For example, the University of California at Berkeley economist Barry Eichengreen has argued that protectionism can be a helpful way to create inflation when central banks are stuck at the zero bound. Several economists, including Lawrence Summers and Paul Krugman, have warned that structural reform to increase productivity might be counterproductive when central banks are paralyzed, precisely because it lowers prices.
Of course, there is always fiscal policy to provide economic stimulus. But it is extremely undesirable for government spending to have to be as volatile as it would be if it had to cover for the ineffectiveness of monetary policy.
There may not be enough time before the next deep recession to lay the groundwork for effective negative-interest-rate policy or to phase in a higher inflation target. But that is no excuse for not starting to look hard at these options, especially if the alternatives are likely to be far more problematic.

Trump Rides a Wave of Fury That May Damage Global Prosperity


A supporter of Donald J. Trump picked up a sign outside the New York Hilton Midtown in Manhattan, where Mr. Trump held his victory party, on Tuesday night. Credit Christopher Lee for The New York Times       

A populist insurrection is gaining force in much of the world, drawing middle-class and blue-collar recruits who lament that they have been left behind by globalization. This upheaval threatens to upend the economic order that has prevailed since the end of World War II.
This was evident before Donald J. Trump’s triumphant rogue campaign for the American presidency.
Now it is beyond argument.
National leaders in Europe and North America are scrambling to placate energized, often unruly groups of people demanding change and a more generous share of the economic spoils.
But the options for addressing the deficiencies of capitalism are severely constrained — both by traditional political realities and by the broader truths of the global economy.
In Britain, which shocked the world in June with its so-called Brexit vote to abandon the European Union, and now in the United States, with its stunning elevation of Mr. Trump, electorates have essentially handed governments a mandate to limit free trade. Voters have unleashed this action plan in the name of lifting the fortunes of working people.
But trade is such an elemental part of the modern global economy that impeding it is almost certain to produce the opposite effect. It will damage economic growth, diminishing prosperity for all.
All of this may make for satisfying politics among populists railing against the predations of elites. After the American election, like-minded politicians, including Marine Le Pen of France, Nigel Farage of Britain and Viktor Orban of Hungary, welcomed the victory of Mr. Trump.
But speeches do not translate into viable job creation strategies.
The American economy depends on access to a global supply chain that produces parts used by innumerable industries, along with a great range of consumer goods. Mexico and China are central actors. Disruption threatens to increase costs for American households. Tariffs on China might provoke a trade war that could slow economic growth, while most likely just shifting factory work to other low-wage nations like Vietnam and India.    

Britain sells half of its exports to the nations of the European Union. If the country leaves the single market, tariffs could apply to its goods, diminishing sales and costing Jobs.
Mr. Trump’s election and Brexit together underscore a central facet of these times. The old ideological divisions of left and right have effectively been eclipsed by a new economic taxonomy — those who have benefited from globalization and those who have not.
In Britain, affluent communities of professionals who hire Romanians to clean their homes and who enjoy getaways to Spain overwhelmingly voted to stay in the European Union. Industrial communities that have lost jobs as manufacturing has shifted east — to Eastern Europe, Turkey and Asia — generally voted to leave.
In the United States, college-educated urbanites making a comfortable living in the quintessential trades of globalization — finance, technology and media — disdained Mr. Trump. People in the center of the country who lack degrees and have seen jobs transferred to China and Mexico played a leading role in delivering the White House to Mr. Trump.
In northeastern England (something like the Rust Belt of Britain) people who voted to leave Europe speak openly about doing so to punish those who beseeched them to vote to stay — people like the exceedingly unpopular former prime minister David Cameron. The situation is so depressed, it cannot get worse, the logic runs. Any economic pain will fall on wealthy Londoners, people say.
Mr. Trump drew support from factory town laborers who have traditionally voted for Democrats but did not trust Hillary Clinton, the Democratic nominee. Many recall how her husband forged the North American Free Trade Agreement, which helped cause a shift of American manufacturing to Mexico.
If Mr. Trump does not find a way to satisfy their high expectations, these people are likely to feel deceived.
And any proposals need to navigate the reliably treacherous politics of Washington. The latest piece of Trump real estate, 1600 Pennsylvania Avenue, sits just down the street from a Capitol full of people who got themselves elected in part by railing against deficits and promising to cut federal spending.
The soon-to-be President Trump has vowed to counteract the problems afflicting workers by unleashing a wave of infrastructure spending that will generate jobs for skilled hands. Perhaps he will have more luck than his predecessor, President Obama, whose own plans for infrastructure spending died time and again at the hands of Republican deficit hawks. Mr. Trump is — at least on paper — a fellow Republican.

Elite Is Not a Four-Letter Word

Somehow talent, power and wealth have become negative attributes.

By Fay Vincent Jr.

    Photo: iStock/Getty Images

While the fine old word “elite” has become a pejorative, its official definition has not changed.

The New Oxford American Dictionary defines elite as “a group of people considered to be the best in a particular society or category, esp. because of their power, talent, or wealth.” With that definition in mind, who would not want to be called elite? Yet to be accused of being an elite is now akin to being identified as evil, if not criminal.

Many Americans now view “power, talent and wealth” as accretions of systems that confer status in unfair ways. To them, an elite person achieves his status by birth at the expense of others. Critical American institutions—such as the country’s best universities or nongovernment organizations—are now being criticized with these ideas in mind. Calling these places elite paints them as inherently undemocratic aeries where only self-selected eagles are able to roost. Only rarely, critics allege, does the system award elite status to those who do not have the advantages of birth, education or talent.

I hesitate to defend orthodoxy, because I respect the freedom of dissent. Yet I also revere ancient truths, including the wisdom of Western civilization. For inspiration, I look to the Greeks and Romans, the Magna Carta and the Constitution. I value civility and honor and patriotism.

I am so old I believe in the essential freedoms found in the Bill of Rights, and I accept the majesty of the U.S. legal system. Despite much contrary evidence, I still think this country’s governance systems basically work. The malignancy of unkempt political stagnation and corruption is dangerous, but American citizens still accept what the Supreme Court decides.

Violent thugs don’t shape public policy.

Yet I worry about what lies ahead. The “elite” political class is degenerating, with vulgar debates and bitter personal attacks. When top politicians struggle to be honest with opponents and with voters, how can I not worry? Truth becomes the slippery urging of the three-card monte hustler who claims his game is honest. Where is the acknowledgment of duties by those who seek and hold public office?

The fundamental duty of politicians is to deserve and fairly earn election and then to render honorable service. What happened to those old-time elites who wanted to find ways to get sound things done? I honor FDR and Ike and Truman and Reagan and Bush 41. They were hardly perfect but proud to serve. They were all elite by virtue of their beliefs in the nobility of their high office. They were not little people too small for that big chair. Elites know they are elite.

Mr. Vincent was formerly CEO of Columbia Pictures Industries, executive vice president of Coca-Cola, and the commissioner of Major League Baseball (1989-92).

Why We’re Ungovernable, Part 15: Glenn Greenwald Explains The Election

The world’s elites, because they live in a system created by themselves for themselves, tend to see events like Brexit and President Trump as aberrations rather than symptoms of a fatal disease.

They’re wrong of course, and the great Glenn Greenwald has posted an essay (Democrats, Trump, and the Ongoing, Dangerous Refusal to Learn the Lesson of Brexit) that explains why.

Here are a few excerpts:

Put simply, Democrats knowingly chose to nominate a deeply unpopular, extremely vulnerable, scandal-plagued candidate, who — for very good reason — was widely perceived to be a protector and beneficiary of all the worst components of status quo elite corruption. It’s astonishing that those of us who tried frantically to warn Democrats that nominating Hillary Clinton was a huge and scary gamble, that all empirical evidence showed that she could lose to anyone and that Bernie Sanders would be a much stronger candidate especially in this climate — are now the ones being blamed: by the very same people who insisted on ignoring all that data and nominating her anyway.

But that’s just basic blame-shifting and self-preservation. Far more significant is what this shows about the mentality of the Democratic Party. Just think about who they nominated: someone who — when she wasn’t dining with Saudi monarchs and being feted in Davos by tyrants who gave million-dollar checks — spent the last several years piggishly running around to Wall Street banks and major corporations cashing in with $250,000 fees for 45-minute secret speeches even though she had already become unimaginably rich with book advances while her husband already made tens of millions playing these same games. She did all that without the slightest apparent concern for how that would feed into all the perceptions and resentments of her and the Democratic Party as corrupt, status-quo-protecting, aristocratic tools of the rich and powerful: exactly the worst possible behavior for this post-2008-economic-crisis era of globalism and destroyed industries.

It goes without saying that Trump is a sociopathic con artist obsessed with personal enrichment: the opposite of a genuine warrior for the downtrodden. That’s too obvious to debate. But, just as Obama did so powerfully in 2008, he could credibly run as an enemy of the D.C. and Wall Street system that has steamrolled over so many people, while Hillary Clinton is its loyal guardian, its consummate beneficiary.

Trump vowed to destroy the system that elites love (for good reason) and the masses hate (for equally good reason), while Clinton vowed to more efficiently manage it. That, as Matt Stoller’s indispensable article in the Atlantic three weeks ago documented, is the conniving choice the Democratic Party made decades ago: to abandon populism and become the party of technocratically proficient, mildly benevolent mangers of elite power. Those are the cynical, self-interested seeds they planted, and now the crop has sprouted.

Instead of acknowledging and addressing the fundamental flaws within themselves, [elites] are devoting their energies to demonizing the victims of their corruption, all in order to delegitimize those grievances and thus relieve themselves of responsibility to meaningfully address them. That reaction only serves to bolster, if not vindicate, the animating perceptions that these elite institutions are hopelessly self-interested, toxic, and destructive and thus cannot be reformed but rather must be destroyed. That, in turn, only ensures there will be many more Brexits, and Trumps, in our collective future.

People often talk about “racism/sexism/xenophobia” v. “economic suffering” as if they are totally distinct dichotomies. Of course there are substantial elements of both in Trump’s voting base, but the two categories are inextricably linked: the more economic suffering people endure, the angrier and more bitter they get, the easier it is to direct their anger to scapegoats. Economic suffering often fuels ugly bigotry. It is true that many Trump voters are relatively well-off and that many of the nation’s poorest voted for Clinton, but, as Michael Moore quite presciently warned, those portions of the country that have been most ravaged by free trade orgies and globalism — Pennsylvania, Ohio, Michigan, Iowa — were filled with rage and “see [Trump] as a chance to be the human Molotov cocktail that they’d like to throw into the system to blow it up.” Those are the places that were decisive in Trump’s victory.

For many years, the U.S. — like the U.K. and other western nations — has embarked on a course that virtually guaranteed a collapse of elite authority and internal implosion. From the invasion of Iraq to the 2008 financial crisis to the all-consuming framework of prisons and endless wars, societal benefits have been directed almost exclusively to the very elite institutions most responsible for failure at the expense of everyone else.

It was only a matter of time before instability, backlash and disruption resulted. Both Brexit and Trump unmistakably signal its arrival. The only question is whether those two cataclysmic events will be the peak of this process, or just the beginning. And that, in turn, will be determined by whether their crucial lessons are learned — truly internalized — or ignored in favor of self-exonerating campaigns to blame everyone else.

Watching the post-election news, it’s not clear that either the right or left gets the depth of the systemic failure. Instead, as Greenwald notes, they’re mostly gloating or pointing fingers at others.

Meanwhile from a purely financial perspective it’s been clear for a couple of decades that the system was beyond (painlessly) fixing. So while Brexit and Trump are wake-up calls – or Molotov cocktails – neither present the developed world with any actual solutions.

Whoever’s in charge, and whatever tweaks they make to existing structures, our mountain of debt will eventually produce an epic crisis, talking politics along for the ride. So to answer Greenwald’s question about whether recent events represent the peak of this process, that’s highly unlikely. Much more likely is a series of financial/political crises that make the past few decades’ booms and busts look like an island of stability.

Viva la Revolucion?

By: Jeff Thomas

Predicting the Efficacy of a Coming Revolution
In every country where a revolution has taken place (whether it be a "soft" revolution, or a violent overthrow), those who are part of the winning team make a point of glorifying the revolution and all the "good" that it has brought. For this reason, the inhabitants of most countries where a revolution has taken place at some point in their history, will believe that the revolution was positive. In countries where that revolution was opposed, the people will most likely regard the revolution as negative.

As an example, Frenchmen tend to praise their revolution of 1789, in which the aristocracy were overthrown. Since then, the emphasis has been on "the little man." The little man would not only be treated equally to the aristocrat, he would receive preferential treatment. Not surprisingly, this devolved into the socialism that dominates France today. In spite of the dysfunctionality of the French system, most Frenchmen fondly praise the revolution and the "freedom" that it ostensibly created for them.

And then we have the Cuban revolution of 1959. Its stated purpose was to overthrow the aristocratic Batista Regime and a replace it with one that favoured the campesinos. The aristocracy was removed and ownership of most everything moved to the state. There is most certainly greater equality in Cuba today (albeit at a very low level), and yet we're taught to regard the Cuban revolution as having been destructive, as it devolved into socialism. Although the current system is largely dysfunctional, the Cuban people, even today, speak of the freedom that the revolution created for them.

These two examples are similar, and yet Westerners are taught to regard the French Government as an enlightened body of men and women who spend their waking hours legislating for ever-increased goodness for the French people, yet we're equally taught to regard the Cuban government as tyrannical rulers over an oppressed people.

The perception of the results of the respective revolutions would seem to have little to do with the reason for the revolution, it's immediate outcome, or its eventual outcome and have more to do with whether the leadership of the country is "on our side" or not. Those countries where the leaders align themselves with our own country are good and enlightened, whilst the leaders who do not align themselves with our country are tyrannical dictators. The true level of freedom for the people is not really at issue.

"We're Not Going to Take it Anymore"

So, let's take a thumbnail view of revolutions. The premise behind the desire for revolution is always the same “ a segment of the population feels that the government (and very possibly their cohorts) have become oppressive and should be overthrown. When the history is written by the victors, they will endeavour to create the impression that the entire population had risen up; however, this is never the case. A dissatisfied minority succeeded in taking over.

So, what, then, of the majority? Well, prior to the revolution, they sat along the sidelines and tolerated whatever perceived injustices the former government imposed upon them. During the revolution, they often sat on the sidelines, hoping to have as little involvement as possible and, after the revolution, they generally sat on the sidelines, hoping to benefit from the new regime, or at least avoid being victimised.

In Russia, in 1917, a relatively small number of people overthrew the aristocracy, and were then faced with the problem of taking over. They had no experience in this and didn't know where to begin. Enter Leon Trotsky and Vladimir Lenin, who had little to do with the revolution itself but, through funding from London and New York banks, were able to pay the Russian military and police to establish order to a cursory degree. Once this was achieved, they used the military and police to establish order to a ruthless degree. (Not exactly "saving the little man from the oppression of the aristocracy".) As Mister Lenin himself said,
"One man with a gun can control one hundred without one."

In the aforementioned France, in 1789, the aristocracy was overthrown by a relatively small number of revolutionaries and, again, the victors had no real experience in running a country.

Enter Maximilien Robespierre, a lawyer with a flair for control and a contempt for the hoi polloi. However, he was good at rhetoric, and the people cheered as he lopped off heads. This, in spite of the fact that he most certainly did not deliver "freedom" to the French people, only the illusion of it. As he himself stated,

"The secret of freedom lies in educating people, whereas the secret of tyranny is in keeping them ignorant."

Meet the New Boss “ Same as the Old Boss

And so it has gone, in one revolution after another. Whether it be a soft revolution, or a violent one, it's generally followed by a disorganised and often violent period, where commerce, social stability and freedom suffer, at the very least, for as long as it takes the new management to pull it all together, and, in most cases, long thereafter. From Juan Peron in Argentina, The Shah in Iran, Hugo Chavez in Venezuela, and countless others, revolution has meant diminished liberty and hard economic times.

Meet the New Boss “ Worse Than the Old Boss

In some cases, such as Mao Zedong in China, Idi Amin Dada in Uganda and Pol Pot in Cambodia, conditions worsened considerably after the revolution had "freed the people," sometimes for decades.

It should be said that there have been a few cases of both soft and violent revolutions in which the new leaders were truly visionary and ushered in an era of greater freedom, such as the American revolution of 1776, Corazon Aquino in the Philippines and Nelson Mandela in South Africa. Yet, even in these cases, the rot set in almost immediately through individuals within the new governments who sought to re-create authoritarian power within an otherwise positive takeover.

Be Careful What You Wish For

The American revolution notwithstanding, violent revolution almost never ends well. The odds are poor that you'll get a more just leader or the greater freedoms that the revolutionaries have promised.

Today, we're observing the deterioration of the world's most prominent capitalistic countries, all at the same time. Each has devolved into a fascist state. Again, to quote Mister Lenin,
"Fascism is capitalism in decline."

Quite so. And, like many Russians in the early days of the twentieth century, we see an increasing number of citizens of the former "free world" realising that the decline of their countries is baked in the cake; that things are not likely to improve in their lifetimes.

And so, many fantasise that a revolution of some sort will occur. They hope for a soft revolution (virtually no chance of that happening), or a violent one “ possibly generated by the millions of gun-owners across the country. Unfortunately, no amount of handguns and assault weapons will equal their government's arsenal of tanks, drones, chemical weapons, etc. A revolt could occur and spontaneous nationwide guerrilla tactics could make it difficult to put down, but the likely outcome would be years of strife and bloodshed, followed by dramatically-increased authoritarian rule.

A third option might be to accept that, yes, the decline into fascism is a dead end, but then, so, in all likelihood, is revolution. That being the case, those who see two possible negative outcomes and no positive one, might take the simpler step of internationalising - moving to one of the many countries that are not presently on the ropes.